Looking to rent out 1st home and buy another (new build)- need advice

[NewbieReed]

Here's the deal: 

Overview:

Bought a property (conventional) earlier this year, divorce decree divided some past debts between me & my ex though the CR bureaus still have all of the accounts on my CRs, looking to buy (FHA) with my fiance in central TX, have high income and high debt - looking for advice, suggestions, concerns, contact info to be PM'd to me

Details:

I own a property with two homes on it (guest house and mainhouse) - just my name on it - conventional fixed mortgage.

Guesthouse is being rented for $900/month - 1 year lease. 

I live in the mainhouse and looking to rent that out for $800/month for 1st 6 months - handyman special (then $1200/month for next 6 months).  

My fiance and I are looking to buy a property together in Austin, TX or Kyle TX  (Central TX area) - preferable new construction (Centex, Pacesetter, Milestone, DR Horton options)

My Income : $95,000 + 20% Bonus (been with company for 2 months so I know the bonus wont count  yet)

His income: $30,000 

Rental income: $900/month currently, will be $1700 a month (leased) when I move out of main house

MONTHLY: $10,250 PLUS rental income

Monthly debts to consider:

Chase CC#1: $161

Chase CC#2: $62

Discover: $70

CC: $177

Cap1: $80

renovation Loan: $560

Nelnet #1: $202

Nelnet # 2: $250

Auto Loan # 1: $514

Auto Loan #2: $440

Mortgage: $1140

MONTHLY TOTAL DEBT: $3656

Debt given to ex (according to Divorce decree), but still in my name on CR: 

Loan: $520

Loan: $277

CC: $177

OUR Credit scores: About 690 / 710 . no late payments from either of us in over 4 years, just some high utility on CC recently. We know we're good in that department. 

I want to know if someone can help me figure out if we would qualify for another home and if so, how much? What is considered? What should I be calculating? 

What is considered with rental property income? i've never done this before and know that there are some experts in this forum!! 

We wouldnt qualify for USDA because of income but are comfortable doing FHA 3.5% down for homes up to $200K. 

Homes are $170-200K in the area that  we prefer. We would like to close in January 2016 in order to have someone in the main home renting for the full calendar year. Is that do-able? reasonable? I just want to be sure that we're covering all of our bases and considering everything before having anyone pull credit. Any advice would appreciated! 

For new construction homes - what shoul di expect for the process? Should I try to negotiate anything in particular? 
Anyone have recent experience with any of  those central texas builders i listed earlier? 

[DallasLoanGuy]

why fha?

690 is fine for conv

equity in current home?

[NewbieReed]

Hey Dallas, 

Thanks for responding! 

We're trying to do this sooner rather than later, which is the reason we thought FHA - 3.5% down is easier than the 5% that I did for the conventional earlier this year, especially considering builders are offering $0 closing costs right now. However, we haven't totally ruled it out.... if we were to hold out a little longer, perhaps we could do it??

Havent even looked into Equity in the current home. I put 5% down in March of this year and have made timely payments since then, so there should be some type of equity in the home by now which is good to think about. 

[ezdriver]

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@NewbieReed wrote:

Hey Dallas, 

Thanks for responding! 

We're trying to do this sooner rather than later, which is the reason we thought FHA - 3.5% down is easier than the 5% that I did for the conventional earlier this year, especially considering builders are offering $0 closing costs right now. However, we haven't totally ruled it out.... if we were to hold out a little longer, perhaps we could do it??

Havent even looked into Equity in the current home. I put 5% down in March of this year and have made timely payments since then, so there should be some type of equity in the home by now which is good to think about. 

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Conventional mortgages are available with 3% down payment although some lenders are still requiring 5%.

[StartingOver10]

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@ezdriver wrote:

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@NewbieReed wrote:

Hey Dallas, 

Thanks for responding! 

We're trying to do this sooner rather than later, which is the reason we thought FHA - 3.5% down is easier than the 5% that I did for the conventional earlier this year, especially considering builders are offering $0 closing costs right now. However, we haven't totally ruled it out.... if we were to hold out a little longer, perhaps we could do it??

Havent even looked into Equity in the current home. I put 5% down in March of this year and have made timely payments since then, so there should be some type of equity in the home by now which is good to think about. 

---

Conventional mortgages are available with 3% down payment although some lenders are still requiring 5%.

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But compare closing costs to see which is more cost effective. The 3% seems to have a disproportionately higher costs and payment than the 5% down. Deepzy had a good example not too long ago comparing FHA min down of 3.5% and the 3% down conventional loan. The period to break even was very long (don't remember now, but it seemed to be longer than 10 years). I will see if I can find the thread.

Edit:  Found a thread, but it isn't quite as detailed as the one I was thinking about:  http://ficoforums.myfico.com/t5/Mortgage-Loans/3-Convetional-Vs-3-5-FHA-Downpayment/m-p/4236267#M179...

Have your LO compare the figures for your loan in particular between the programs. That is the best way to determine the best program for you.

[ezdriver]

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@StartingOver10 wrote:

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@ezdriver wrote:

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@NewbieReed wrote:

Hey Dallas, 

Thanks for responding! 

We're trying to do this sooner rather than later, which is the reason we thought FHA - 3.5% down is easier than the 5% that I did for the conventional earlier this year, especially considering builders are offering $0 closing costs right now. However, we haven't totally ruled it out.... if we were to hold out a little longer, perhaps we could do it??

Havent even looked into Equity in the current home. I put 5% down in March of this year and have made timely payments since then, so there should be some type of equity in the home by now which is good to think about. 

---

Conventional mortgages are available with 3% down payment although some lenders are still requiring 5%.

---

But compare closing costs to see which is more cost effective. The 3% seems to have a disproportionately higher costs and payment than the 5% down. Deepzy had a good example not too long ago comparing FHA min down of 3.5% and the 3% down conventional loan. The period to break even was very long (don't remember now, but it seemed to be longer than 10 years). I will see if I can find the thread.

Edit:  Found a thread, but it isn't quite as detailed as the one I was thinking about:  http://ficoforums.myfico.com/t5/Mortgage-Loans/3-Convetional-Vs-3-5-FHA-Downpayment/m-p/4236267#M179...

Have your LO compare the figures for your loan in particular between the programs. That is the best way to determine the best program for you.

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Agree ... but I was only commenting on the fact that there are available options when another post suggested that there was none. As with any mortgage quote, every line item should be reviewed and compared.

[Anonymous]

I thought you couldn't go FHA unless you've not been a home owner for at least 3 years?

[StartingOver10]

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@Anonymous wrote:

I thought you couldn't go FHA unless you've not been a home owner for at least 3 years?

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No, there is no prohibition on going FHA if you are a previous homeowner.  The 3 year rule applies to "first time homebuyer" programs - you are considered a first time homebuyer again if you haven't owned a home for 3 years or more.

There are good reasons to finance FHA in circumstances where a conventional loan won't work:  DTI ratios are a common reason, also lower downpayments, also lower MI costs if your mortgage mid-score is less than 680 or if you have had a large derog (Bk or SS or f/c) or you are receiving gift funds. There are more reasons, but these are very common.

[DallasLoanGuy]

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@Anonymous wrote:

I thought you couldn't go FHA unless you've not been a home owner for at least 3 years?

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that is inaccurate

fha is not a first time homebuyer program.